Multifamily real estate syndication is an investment strategy that allows individual investors to pool their resources and collectively invest in larger-scale multifamily properties.
Through this investment strategy, you can diversify your investment portfolio and earn passive income along the way.
The multifamily syndication process involves five key phases, from initial acquisition to the eventual exit strategy.
To help you fully understand the entire multifamily syndication process, this blog post will explore each phase in detail!
5 Key Phases of a Multifamily Real Estate Deal
- Deal Sourcing and Acquisition
The first phase of any multifamily syndication is deal sourcing and acquisition.
At XSITE Capital, we use a strategic process to find the best properties within the best markets. This process includes examining the rent growth in the area, sales trends, employment opportunities and the supply to ensure that the market would be lucrative.
During this phase, our team conducts thorough market research to analyze various conditions so that we can fully assess and properly ensure that the property has positive financial ability.
Once a suitable property is identified and researched, we begin negotiating the purchase price, securing financing and finalizing the acquisition.
- Capital Raising and Investor Onboarding
Once we acquire the property, that’s where our investors come in!
In this stage, the syndicator, like XSITE Capital for example, presents the investment opportunity to their investor community by outlining the property’s key details, financial projections and expected returns.
Interested investors can then commit capital to the syndication, becoming limited partners in the venture.
As investors choose to be involved with the deal, the syndicator ensures proper legal documentation, subscription agreements and investor communications are in place before accepting capital contributions.
- Property Management and Value-add Creation
Once all capital is raised for that specific deal, the syndicator can then transition into the property management and value-add creation phase.
During this stage, the syndicator oversees the day-to-day operations of the property, including tenant management, maintenance, rent collection and expense optimization.
This is one of the largest benefits for investors in multifamily deals because as an investor, you don’t have to be directly involved with any day-to-day operations when you partner with an investment group.
Instead, you invest your capital front, trust that the rest is taken care of for you and still get to reap the passive benefits.
In addition to the day-to-day operations of the property, syndicators also typically implement a value-add strategy, such as property renovations, amenity enhancements or operational improvements to increase the property’s value and rental income.
The syndicator’s goal during this phase is to enhance the property’s performance and generate attractive returns for all investors involved.
- Ongoing Investor Communication and Reporting
Throughout the entire syndication, investors will receive ongoing communication and regular updates so that they are fully aware of what’s happening with the property and how it’s performing.
When you partner with an investment group like XSITE Capital, you can expect consistent communication that includes details about property performance, financial statements, occupancy rates and any significant developments or challenges.
- Exit Strategy and Capital Distribution
The final phase of a multifamily syndication is the exit strategy and capital distribution.
This stage involves carefully planning and executing the syndicator’s strategy for selling the property and distributing profits.
The exit strategy may include selling the property outright, refinancing to access equity or executing a 1031 exchange to defer capital gains taxes.
Once the property is sold, the syndicator distributes the profits to the investors according to the terms outlined in the syndication agreement.
This phase marks the close of the investment and investors can choose to reinvest their returns into subsequent syndications or pursue other investment opportunities.
How to Start Investing in Multifamily Real Estate
Investing in multifamily real estate is one of the best ways to diversify your investment portfolio and earn passive income.
When you partner with experienced syndicators, such as XSITE Capital, you can trust that the market research is carefully considered and that your money is going toward investments that will produce positive returns.
If you’re unsure of how to get started with multifamily real estate investing, click here to view our process!
The XSITE Investors Community is for accredited investors where you can receive:
- Monthly meetup replays from all months prior (so you can continue growing your mind while growing your wealth)
- Invites to in-person meetups (because there’s nothing like being in a true community together!)
- 30 minute 1:1 calls with our Investor Relations team (so you can get your questions answered and feel empowered to take action)
- First look at new investment opportunities (so you can beat the competition and easily jump into the deals that are a good fit for you)
Today, XSITE Capital currently has over $168 million portfolio value, has helped empower and grow over 1,000 minds and proudly has over 800 doors under management.
We welcome new investors into our community each week and would love to have you.